Penelope utility function is U (a, b) = a+ 10b−b2, where a is the amount of apples consumed and b is the amount of bananas consumed. He has $100 income. The price of apple is $0.5 per lb. Price of banana’s though increases with its purchase. Specifically, buying, b pounds of bananas will cost Pedro b2. a. What is Penelopes optimal consumption? b. Now, he suddenly acquires an extra $100 income. How this will change his allocati
Penelope utility function is U (a, b) = a+ 10b−b2, where a is the amount of apples consumed and b is the amount of bananas consumed. He has $100 income. The price of apple is $0.5 per lb. Price of banana’s though increases with its purchase. Specifically, buying, b pounds of bananas will cost Pedro b2. a. What is Penelopes optimal consumption? b. Now, he suddenly acquires an extra $100 income. How this will change his allocati
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 13PAE
Related questions
Question
Penelope utility function is U (a, b) = a+ 10b−b2, where a is the amount of apples
consumed and b is the amount of bananas consumed. He has $100 income. The
price of apple is $0.5 per lb. Price of banana’s though increases with its purchase.
Specifically, buying, b pounds of bananas will cost Pedro b2.
a. What is Penelopes optimal consumption?
b. Now, he suddenly acquires an extra $100 income. How this will change
his allocation?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning